Clashing cultures in cross-border business
Studies show that up to 70 per cent of merger deals fail, a third of these failures can be attributed to culture clashes. She notes that ‘for deals that mix businesses from advanced and emerging markets, the statistics may be worse.’
Cultural misunderstandings encompass a vast array of issues, for example: the pace at which business is conducted; attitudes to performance related pay; how explicit one can be when giving (or disagreeing with) instructions; feelings about disability, gender and LGBT rights, and much more. The acquired staff will inevitably worry about job security or if they are safe, then whether the new owner properly understands its acquired customers. Some companies sensibly retain and build on the local leadership. Others deploy staff who have lived and worked in both countries and speak the local language as link points between headquarters and local management (though such executives can misunderstand both host and home cultures).
‘Culture clashes involving French companies have scuppered, at least in part, high-profile mergers,’ writes the FT’s Harriet Agnew in a book review looking at perceptions of cultural insularity at the top of France’s leading companies. The book offers lessons in ‘what happens when corporate cultures collide.’ More than three-quarters of CAC40 chiefs attended four French schools ‘–the elite training institutions that groom the country’s business leaders and civil servants’ while executives outside the ‘network’ castigate French management for being centralised, hierarchical and rigid.